The lawsuit opens a potentially expensive chapter in the banking industry's scramble to comply with fair-lending laws.

The Washington Lawyers Committee for Civil Rights and Urban Affairs - which extracted a $45 million discrimination settlement from Denny's restaurants last year - filed the 97-page suit in U.S. District Court here on behalf of up to 600 African-American applicants.

"This is a warning shot," said John P. Relman, director of the Lawyers Committee's fair-housing project. "Banks are going to face not just the Justice Department, not just the other agencies, but they are going to face the resources of the private bar, which is going to bring these cases coast to coast."

The suit charges NationsBank Corp. and two of its subsidiaries, NationsBank N.A., and Nationsbanc Mortgage Co., with treating black applicants differently than white applicants with similar incomes, debt ratios, and credit histories.

The complaint alleges 11 instances of illegal lending discrimination. For example, NationsBank refused to count income from a part-time job and a guaranteed pay raise when deciding if one black applicant, Robert Whaley, was qualified for a $59,000 loan, but counted those items when approving white applicants, the group said.

The Lawyers Committee is a nonprofit organization founded in 1968 to represent victims of housing and employment discrimination. Eight months ago, the group published a study concluding NationsBank had the worst fair- lending record in the Washington area, rejecting black applicants 12 times more often than whites.

Mr. Relman at the time asked applicants to call an "800" number to report individual instances of bias. He declined to say whether the suit is based on those calls.

The Lawyers Committee asked for compensatory and punitive damages that could run into the tens of millions of dollars.

NationsBank, whose lead bank received an "outstanding" rating under the Community Reinvestment Act in July, vowed to fight the charges.

"We will be very vigorous and very aggressive," said Catherine Bessant, a senior vice president at NationsBank. "We are the wrong bank to take on here. We got a great record and we are fighters."

Ms. Bessant said the bank reviews every application it rejects from minorities. NationsBank also allows rejected loan applicants to appeal to the Urban League, which Ms. Bessant said provides a back-up means of detecting discrimination.

Ms. Bessant said the bank has doggedly pursued minority applicants, bringing the number of African-American borrowers in Washington to 585 last year, a 220% jump in three years. The bank now makes more mortgage loans to blacks in Washington than to whites, she added.

Ms. Bessant criticized the lawyers group for not meeting with her before filing the suit. "It is not like I am hard to find," she said. "I am not invisible."

Mr. Relman defended that decision, saying his group has found that companies are not willing to negotiate seriously until a suit is filed.

More suits could be forthcoming, Mr. Relman said, but he declined to elaborate.

Industry observers agreed that the Lawyers Committee entry into the debate is a milestone. "This is the second wave," said James D. McLaughlin, director of regulatory affairs at the American Bankers Association. The industry has been expecting class actions to follow the Justice Department's recent fair-lending settlements, he said.

The suit raises scores of political issues and left observers of CRA developments uneasy.

"NationsBank is not the Mother Teresa of banking," said Kenneth Thomas, an author on CRA. "But they are not one of the bad guys. I wish they would have focused their investigation on one of the bad guys."

The suit gives lawmakers opposed to the reinvestment act and to fair- lending laws more ammunition to push for repeal, Ms. Bessant said. They now can say that even a bank that supports these laws isn't safe from protest, she said.

John Taylor, president of the National Community Reinvestment Coalition, said he hopes lawmakers will distinguish between NationsBank's CRA efforts and its mortgage affiliate's fair-lending record. Mortgage companies are not covered by the CRA, he noted.

"I hope that people appreciate that there is a distinction here," Mr. Taylor said.

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